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The French hotel industry performance for September 2008
In a situation of panic and fear throughout the world due to the financial crisis, should we remain definitely pessimistic or on the contrary stay reasonable while analysing September 2008's results?
Although September is traditionally good for the French hotel industry, the Revenue per available room (RevPAR) drops by 3.8% this year. The decrease in occupancy (-3.4 points) is significant in Paris and the provinces and affects all the categories of hotels. The drop in occupancy rates, which began in early summer, continues. Real time indicator of the business' vitality and leisure clientele's state-of-mind, the hotel industry is more influenced by the gloomy economic situation and downturn in household purchasing power than by the recent collapse of financial markets. However, it is still difficult to talk at this stage about a wave of panic. The global occupancy rate remains high at 75.5%. At the exception of the upscale hotels, all segments succeeded in maintaining an uptrend of their average daily rates. Economic hotels proved their ability to resist to the crisis and ended the month on a positive trend.
The absence of the Rugby World Cup pulls down results of midscale and upscale hotels in Paris.
Another explanation to this negative result: September 2008 logically suffers due to the absence of an exceptional event held in France in September 2007: the Rugby World Cup. Germany's RevPAR dropped by 7.5% in July 2007, one year after the FIFA World Cup. However, compared to September 2006, the national RevPAR remains higher by 2.5 euros (3.8%). In 2007, the Rugby World Cup had a major impact on the occupancy during the weekends, particularly on the mid and upscale hotels. These two categories were the most affected last month. This year, the absence of the Rugby World Cup was felt most in Paris, which welcomed the very profitable Anglo-Saxon clientele. The France's hotel industry sees its RevPAR drop by 7.0%, but nonetheless maintains an occupancy rate higher than 85%.
The drop in occupancy could soon lead hoteliers to revise their rate policies.
Until now, 2008 followed the exceptional trajectory of 2007, where France's hotel industry has almost achieved 2000's Revenue per available room growth performance (+9.1% over the year). However, the rhythm slowed down, but the cumulated results of the first 9 months show growth in the RevPAR by 4.0%. In October, Paris should overcome the absence of the Rugby World Cup by hosting the Motor Show, but uncertainty remains for the end of the year. The seminars' market is starting to suffer from corporate budget limitations. And, due to the drop in occupancy rates, hoteliers might be forced to revise their price yield strategy. Contrary to previous crises, they seem to be more prepared to act wisely by preventing an undesirable price war from which it will be difficult to escape once started.
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Created in 1985 by Georges Panayotis, MKG Hospitality is currently the leading European consulting service provider for the hotel, tourism and catering industries. It has established the most important World Hotels database outside the United States, successfully representing all of the various hotel segments. The monthly program of MKG Hospitality's database covers a sample of approximately 10,000 corporate operated chain hotels offering 1,000,000 rooms.
Ever since September 2004, MKG Hospitality's database has been offering a daily program: Hotelcompset.com that enables users to perform a daily follow-up of each hotel's activity indicators. This program covers 1,500 hotels and 125,000 rooms in France, thus making it the leading program used for daily performance follow-up in Europe.
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